RBS boss set to waive bonus

RBS Chief Executive Stephen Hester is set to waive his annual bonus, it is reported

Royal Bank of Scotland boss Stephen Hester is set to waive his annual bonus payment, it has emerged.

The chief executive is understood to be gearing up to decline a payout for 2009 after coming under pressure in the face of predicted hefty losses for the bank.

RBS, which is 84% taxpayer owned after a number of bailouts, is expected to report a shortfall of around £5.3 billion when it announces its results on Thursday.

Mr Hester's decision not to take his bonus allocation comes after Barclays' top bosses opted to waive their right to payouts last week.

The RBS chief is in the midst of a five-year turnaround plan to restore the bank to health after taking on the job at the height of the financial crisis.

His remuneration package could reach £9.7 million - which he has said even his parents think is too much - based on his efforts to restructure the bank as well as its profitability.

RBS is understood to still be in talks with UK Financial Investments (UKFI) - the body that manages the Government's stakes in bailed-out banks - over the overall size of its bonus pot.

Current estimates put the total at around £1.3 billion for its investment bankers, despite forecasts of a second year of losses at the group. RBS posted a record £24.1 billion pre-tax loss for 2008 and is expected to have stayed in the red last year, although the shortfall is much narrower.

The bank's high-earning staff will not be paid cash bonuses for 2009, although staff paid less than £39,000 will be able to take home a cash bonus of up to £2,000.

Mr Hester has said the firm would pay its investment bankers "the minimum we can get away with" in the bonus season, but has warned that the bank must be able to attract and retain key staff.